A tax treaty is a tax treaty between two

countries that was made in order to

minimize double taxation and various tax
avoidance efforts.
 OECD / G20 The OECD wishes that taxation rights
be granted to domicile countries
(Organisationfor Economic Co-
operation & Development)

JAPAN

UN (United Nation)
On the contrary, the UN wants taxation rights to
be given to the source country of speech.
 The basic line of current understanding
can be summarized as follows

Japanese Constitution For those treaty provisions that give a

For those treaty provisions
“no new taxes shall be basis for the exercise of taxing power
Article 98 Clause 2 that restrain the taxing
imposed or existing one by the Japanese government, their
stipulates that “the power of the
domestic application will be
treaties concluded by modified except by law Japanese government, a
categorically precluded by Japanese
or under such review of whether the
Japan and established Constitution Article 84 because to do
provision in question is self-
law of nations shall be conditions as law may so would violate the principle that no
executing or not will be
faithfully observed” prescribe”. necessary in light of its
taxation is allowed without statutes
legislated by the Diet
effect on legal certainty.

Following this distinction, one
may observe that it is the
domestic law that gives
legitimate legal basis to
exercise taxing powers, and
that tax treaties generally
function as a restriction on
such powers.
In other words, tax treaties
are a tax-restraining norm
rather than a taxing norm.
For example, the 2003 Japan-U.S.
Tax Treaty Article 1(2) states that
“the provisions of this Convention
shall not be construed to restrict in
any manner any exclusion,
exemption, deduction, credit, or
other allowance now or hereaf
 CONCLUSI ON

Tax Treaty Implementation

Law (TTIL) helps mitigate
the risk of uncertainty in
the case of possible conflict
(and of legal vacuum)
between tax treaty and
domestic law on a number
of specific issues in Japan.